O'Donnell let Frist mislead on ANWR drilling, Exxon Mobil profits

May 1, 2006 2:32 PM EDT ›››
JOE BROWN

On the April 27 edition of MSNBC's Hardball with Chris Matthews, guest host and MSNBC chief White House correspondent Norah O'Donnell failed to challenge Senate Majority Leader Bill Frist's (R-TN) suggestion that drilling for oil in the Arctic National Wildlife Refuge (ANWR) is necessary to reduce America's "60 percent dependen[ce]" on foreign oil. In fact, according to the Department of Energy, drilling in ANWR is expected to reduce projected U.S. dependence on oil imports by only 4 percent over the next 20 years, from 68 percent of petroleum product supplied in 2025 to 64 percent. O'Donnell also failed to challenge Frist's claim that the record profits of Exxon Mobil Corp. are justified because companies such as Exxon Mobil "make profits in certain years and in other years lose money because" they don't "hit a well." In fact, Exxon and Mobil -- which merged in 1999 -- have both made significant profits for at least 13 consecutive years, according to a Media Matters for America review of the companies' financial statements, press releases, and media coverage.

When O'Donnell noted that Senate Republicans had coupled a proposal to distribute $100 rebates to American taxpayers with a proposal to allow drilling in ANWR, Frist stated that "we need to look at things like [drilling in] ANWR" because "[w]e're 60-percent dependent on foreign sources of oil." But a July 2005 report by the Energy Department's Energy Information Administration (EIA) documented that drilling in ANWR would do little to address U.S. dependence on foreign oil over the next 20 years. The report stated: "Opening ANWR reduces import dependence by 4 percentage points, from 68 percent of petroleum product supplied in 2025 to 64 percent."

Later, O'Donnell asked Frist whether it was "right" for Exxon Mobil to make record profits and offer an approximately $400 million retirement package to former Exxon Mobil chairman and CEO Lee R. Raymond at a time when Americans are paying record gasoline prices. Frist responded that "these companies ... make profits in certain years and in other years lose money because of exploration" if they don't "hit a well," although when O'Donnell pressed him about Raymond's compensation, Frist stated that it was "wrong."

But a Media Matters review of Exxon Mobil's financial statements revealed that the company, which has been in existence since the merger of Exxon Corp. and Mobil Corp. in November 1999, has reported billions of dollars in profits every year since the merger, and reported a $2.3 profit during the fourth quarter of 1999, when the merger took place. (Although the federal government observes a fiscal year beginning October 1 and ending September 30, Exxon Mobil's financial statements include calculations based on a fiscal year beginning January 1 and ending December 31.)

Further, a Media Matters review of Exxon and Mobil statements and media reports on the two companies -- going as far back as 1993 -- has revealed no yearly losses. Both Exxon and Mobil also reported billions of dollars in profits during the first three quarters of 1999, prior to their merger.

O'DONNELL: And, of course, one of the things that the Republicans proposed today, you guys are proposing a $100 gas rebate for millions of Americans. You've attached it, however, to the very controversial drilling in the Arctic Wildlife. Let me ask you though, is $100 really going to help Americans?

FRIST: Well, you know, Norah, right now, to a lot of Americans, it will be actually a huge help, and the whole idea is to get that relief to the American consumer today who really unexpectedly, again, has been hit by these skyrocketing gas prices.

Does it change supply and demand? No. And that's why it is important to increase exploration and domestic production in this country. We know that China is growing, India is growing, their use of energy is increasing. We're 60-percent dependent on foreign sources of oil, those sources being in unstable parts of the world right now -- Nigeria, the region of the Middle East, Iran, Saudi Arabia.

We have to increase the supply here. The supply is here. We can drill for it, explore it in an environmentally friendly way, and that's why we are so convinced that we need to look at things like ANWR or the Alaska Wildlife Refuge.

[...]

O'DONNELL: Let me ask you about Exxon profits, because we learned today they're up seven percent this quarter, that Exxon has made in terms of income, $8.4 billion in the past three months. Of course the former head of Exxon Mobil just got a $400 million compensation package. Is that right?

FRIST: Well, first of all, it does require these companies, who we are totally dependent on, in terms of increasing that supply, it does require them to make profits in certain years and in other years lose money because of exploration. You don't know if you're going to hit a well. You don't know if you're going to hit a reserve or not.

And that is going to require some understanding on all of our part. The one thing that we can have no tolerance for -- and the reason that [House] Speaker [J. Dennis] Hastert [R-IL] and I wrote a letter to the president -- is that we need to make sure that the markets are fully transparent for supply and demand, market pricing to work. That there can be absolutely no price gouging, either at the retail level or at that wholesale level and that the futures market, which ultimately determines that price and demand, is not being manipulated in any way.

O'DONNELL: But, Senator, you didn't say whether you thought it was right or wrong. Is it right or wrong to be awarded $400 million in compensation?

FRIST: Well, the compensation, I think, is wrong. To allow right now in the marketplace, for companies to make a profit I think is very good, because if they don't make a profit, they're not going to be able to invest to increase the supply.

The important thing is that market is transparent. It has to be fully justified by the investments that they will be making. If they say they're going to be out there exploring, we need to make sure that those profits are invested in that exploration.